Chapter 3: Information Systems for Competitive Advantage

Q1: How does organizational strategy determine information systems structure?

Strategy determines value chains which determine business processes that will determine the design of information systems.

Q2: What five forces determine industry structure?

Bargaining Power of Customers

Threat of Substitution

Bargaining Power of Suppliers

Threat of New Entrants

Rivalry

Q3: How does analysis of industry structure determine competitive strategy?

In order to respond to the structure of an industry, one of four competitive strategies much be chosen.  These are: Cost, Differentiation, Industry-wide, and Focus.

Figure 3-5

	Cost	Differentiation
Industry-Wide	Lowest cost across the industry	Better product/service across the industry
Focus	Lowest cost within an industry segment	Better product/service within an industry segment

Q4: How does competitive strategy determine value chain structure?

There are five major primary activities and four support activities.

Primary Activities

Inbound Logistics: receiving, storing, raw materials

Operations/Manufacturing: transforming material into product

Outbound Logistics: collecting, storing and distributing the product to buyers

Sales and Marketing: inducing buyers to purchase product

Customer Service: assist customers use of the product and at the same time enhancing product’s value.

Support Activities

Procurement: process of finding vendors, setting up contracts, and negotiating prices

Technology: research & development, activities used to develop techniques, methods, procedures

Human Resources: recruiting, compensating, evaluation, and training of full-time/part-time employees

Firm Infrastructure: general management, finance, accounting, legal, and government affairs

Q5: How do business processes generate value?

A business process is a set of activities that each generates value by transforming inputs into outputs. Each process varies in cost and effectiveness and with information about each process, management can make decisions to reduce costs and maximize value.

Q6: How does competitive strategy determine business processes and the structure of information systems?

It all depends on which competitive edge you want to adopt. If you want to be a low-cost business, you must implement processes to minimize costs. If you choose a differentiation strategy that appeal to a higher-income crown, you must ensure that an excellent customer service process is in effect.

Q7: How do information systems provide competitive advantages?

There are many different strategies that give competitive advantages to a business.

Fig 3-12

Competitive Advantage via Products & Processes

Product Implementation: 1. Create a new product/service, 2. Enhance product/service, 3. Differentiate

Process Implementation: 4. Lock in customers & buyers by making it difficult or expensive for them to switch to another product, 5.Lock in suppliers by making it difficult to switch to another organization or by having a good relationship with them, 6. Raise barriers to market entry by making it difficult and/or expensive to enter the market, 7. Establish alliances to establish standards, promote product awareness and needs, develop market size, reduce costs, etc., 8. Reduce costs to maximize profit and give you freedom to reduce prices and.

Information Systems allow a business to customize their management to their competitive advantages.

Q8: 2020?

Information systems will improve more and more over time, giving a business a growing freedom to implement competitive advantages into their products and processes.

Kroenke, David. "Chapter 3: Information Systems for Competitive Advantage." Using MIS. Upper Saddle River, NJ: Prentice Hall, 2011. 64-91. Print.